Human relations in management: A critical analysis of neo-classical theory

Full Text

Introduction Management theories evolved to answer the issues that business organisations face [1]. Both classical and neoclassical approaches contributed to this evolution. The classical approach, which included uniform notions about organisational administration, emerged in the late nineteenth and early twentieth century. According to Majhi and Dansana [2], this perspective, which emerged during the industrial revolution, is based on efficiency ideas. By the late nineteenth century, the widespread adoption of industrial production and the formation of large-scale organisations need effective management practices to motivate personnel and increase productivity. Murschetz, Salamzadeh, and Khan [3] emphasized that this demand resulted in classical management theories, with important contributions from Frederick Taylor, Henri Fayol, and Max Weber, who introduced essential ideas such as Taylor’s Scientific Management, Fayol’s Administrative Management, and Weber’s Bureaucratic Management. According to Kaul [4], neoclassical theories emerged in response to classical theories’ overemphasis on mechanical and physiological components of management. These neoclassical theories took a more focused on people approach, stressing the study of individual needs, motivations, actions, and attitudes inside companies. During the 1920s and 1930s, two important schools of thought emerged inside the neoclassical theory umbrella: the Human Relations School and the Behavioural School [5]. In the late 1920s and early 1930s, Elton Mayo and his colleagues’ Hawthorne experiments made an important contribution to the Behavioural viewpoint. This time period also witnessed the birth of the Human Relations Movement, which included concepts such as Douglas McGregor’s Theory X and Theory Y [6]. Neo-Classical Theory represented a pivotal evolution from classical approaches because of its role in human interactions. The study aims to examine the Neo-Classical Theory of Management Philosophy, its foundational principles, strengths, and limitations in the context of contemporary organisational dynamics. Also, the study presents a critical analysis into the theory’s relevance and practical contributions in the managerial work practice. The Classical Management Approach The classical management theory, which evolved in the nineteenth and early twentieth centuries, was established during a period when firms prioritized large-scale production and aimed to enhance productivity and operational efficiency [7]. According to this theoretical paradigm, management is a structural notion that applies universally, regardless of particular circumstances or contexts [8]. According to Burawoy [9], the ideas of classical management theory are still very applicable in modern management practices, especially when distinguishing between operational and managerial tasks. Anglin et al. [10] added that this approach advocates for clearly delineated tasks and promotes mutual cooperation between employers and employees, thereby enhancing productivity and efficiency. According to Mandysova [11], the classical school of management is distinguished by a highly structured framework that emphasizes formal organisation with well-defined functions, comprehensive regulations, and authoritarian leadership. Taylor, Fayol, and Weber were the most prominent adherents of classical theory, each of whom articulated precise rules and processes for achieving such organisational structure. Neoclassical theorists, on the other hand, recognized the significance of individual and group behaviour, with a strong emphasis on human relationships. Nhema [12] emphasizes the relevance of classical management theories in his research of modern public administration, stating that classical ideas provided a firm basis and robust mechanism for transparency. However, Rogers [13] highlighted the limits of the classical approach, stating that it predominantly evaluated physiological elements while ignoring psychological issues, treating the company as a machine and its employees as mere components, resulting in inadequacies. The subsequent section focuses on the neo-classical approach to management. Neo-Classical Approach of Management The Hawthorne studies in the 1920s gave rise to the Neo-Classical approach to management, which emerged in response to classical theory’s shortcomings. Gunbayi and Sorm [14] emphasized that the traditional strategy was primarily concerned with jobs and machinery, which finally led to opposition from employees due to an absence of interpersonal and psychological pleasure. As a result, the focus moved to the human components of management. George Elton Mayo (1890-1949) is regarded as the pioneer of neoclassical thought. Mayo led the team that carried out the legendary Hawthorne Experiments at the Western Electric Company in the United States from 1927 to 1932. According to Hussain, Haque, and Baloch [15], the neoclassical theory regarding leadership is made up of three main components: the Hawthorne experiment, the human relations movement, and organisational behaviour. Hawthorne Experiments: The Hawthorne studies, conducted at the Western Electric Company in the United States between 1927 and 1932, yielded significant insights into individual and group behaviour [16]. Initially sponsored by General Electric, this research was led by Elton Mayo and his associates. In one notable experiment, researchers observed changes in productivity in response to variations in working conditions. The findings from the Hawthorne studies and subsequent experiments underscored the critical importance of the human element in the workplace [17]. The Hawthorne experiments are categorized into four distinct stages: the Illumination Experiments, the Relay Assembly Test Room Experiments, the Mass Interviewing Program, and the Bank Wiring Observation Room Study. Illumination Experiments: The initial phase aimed to investigate the impact of lighting on worker productivity. Researchers [17; 18] adjusted the levels of illumination in the work environment to observe any corresponding changes in productivity. However, productivity increased regardless of whether the lighting was improved or dimmed. This phenomenon, later termed the “Hawthorne Effect”, suggested that workers’ performance was influenced more by the attention they received from researchers than by physical changes in the work environment [19]. Relay Assembly Test Room Experiments: During this phase, a small group of female employees was isolated and studied under a variety of conditions, including shifts in work hours, breaks, and incentives. The goal was to determine how different variables affected productivity and tiredness. According to Mali and Lim [20], the results showed that efficiency increased continuously, not necessarily owing to physical modifications, but because employees felt more appreciated and engaged as a result of the social environment and the researchers’ interest in their job. This emphasised the role of social variables and worker satisfaction in determining productivity. Mass Interviewing Program: During this phase, a small group of female employees was isolated and studied under a variety of conditions, including shifts in work hours, breaks, and incentives. The goal was to determine how different parameters affected productivity and tiredness. According to Mali and Lim [20], the results showed that efficiency increased continuously, not necessarily owing to physical modifications, but because employees felt more appreciated and engaged as a result of their social setting and the researchers’ curiosity in their job. This emphasised the role of social variables and worker satisfaction in determining productivity. Bank Wiring Observation Room Study: During this phase, a small group of female employees was isolated and studied under a variety of conditions, including shifts in work hours, breaks, and rewards. The goal was to determine how different characteristics influenced productivity and tiredness. Nhema [12] found that productivity regularly grew, not because of physical changes, but rather employees felt more appreciated and engaged as a result of the social environment and the researchers’ keen interest in their job. This emphasised the importance of social variables and worker satisfaction in determining productivity. Human Relation Movement: Many theorists in the subject of human relations studied interpersonal and social ties within organisations, drawing inspiration from the Hawthorne Experiments. The human relations movement was greatly aided by research conducted by Rensis Likert, Douglas McGregor, Frederick Herzberg, Keith Davis, and Abraham Maslow. According to this movements, the nature of relationships, group norms, and social conditioning all have a major role in how employees react in the workplace. Organisational Behaviour: Group dynamics was first studied by a number of psychologists and sociologists, including Chris Argyris and Homans the field of organisational behaviour was developed by Kurt Lewin, Katz, Kahn, and others. It entails examining how people behave, think, and act in both individual and group settings within organisations. According to Cartwright [21], this strategy which is an upgraded and expanded form of the human relations movement - became known as the behavioural approach. The application of knowledge derived from behavioural sciences (psychology, sociology, anthropology, etc.) to management issues is multifaceted and interdisciplinary. It is also known as the behavioural science approach as a result. Evaluation of the Neo-Classical Approach The neo-classical approach built on the findings of the Hawthorne Approach by incorporating ideas from sociology, psychology, and other behavioural sciences, with a focus on motivation, interpersonal relationships, and social dynamics in work environments. Neo-Classical Theory of Management provides a comprehensive framework that reinterprets conventional organisational paradigms by emphasizing the value of the individual, work groups, and participative management. Gaeta et al. pointed out that this theory’s fundamental principle is the understanding that every person is more than just a cog in the organisational machine and that they each have distinct feelings, goals, and abilities [22]. The neoclassical theory of management emphasizes three key elements that distinguish it from the classical approach: the individual, work groups, and participative management [23]. The Individual: The significance of individual differences among workers is emphasized by neoclassical theory. This viewpoint, according to Oyibo [24], recognizes that every employee has distinct emotions, sentiments, ambitions, aspirations, and expectations, all of which have an impact on their conduct and output. Neoclassical theorists contend that employees are complicated people with unique social and psychological demands, not just rational economic agents [25]. According to Gunbayi and Sorm [14], employee satisfaction and productivity are highly influenced by social and psychological aspects. For example, the researchers found that worker efficiency rose not only as a result of physical modifications in the workplace but also as a result of the workers’ care and concern from the researchers. According to Jenkins [19], the neo-classical method also placed a renewed emphasis on theories of motivation, which examined what motivates workers to produce and how their needs may be satisfied to increase output. The most well-known contribution in this field is Abraham Maslow’s Hierarchy of Needs which indicates that human wants are ranked from most fundamental physiological demands to safety, esteem, love and belonging, and eventually self-actualization. When lower-level psychological wants are met, people are driven by higher-level psychological demands. Thus, managers must thus recognize and respond to these unique needs in order to effectively inspire employees and raise job satisfaction. Work Groups: Neoclassical theory places a strong emphasis on the recognition of informal work groupings and their impact on employee behaviour. The Hawthorne studies conducted by Elton Mayo shown the noteworthy influence of informal groups on worker satisfaction and productivity. These studies also showed that social conventions and interactions inside the group had a greater impact on workers’ performance than did financial incentives or physical working conditions. According to Wachter [26], neoclassical theorists see the workplace as a social structure with formal and informal components, in which employees are not solitary individuals but rather members of unofficial groups created via social interactions. Thus, in order to achieve the best possible organisational functioning, managers need to understand group dynamics and figure out how to merge informal groupings with formal structures [27]. Participative Management: The neoclassical theory’s emphasis on participative management is a third essential component. Employee participation in decision-making, according to proponents, is essential for boosting commitment and motivation. Hu [28] asserts that neoclassical philosophy is intrinsically employee-centric, suggesting that workers ought to participate in the planning of employment operations and content. By using the expertise and creativity of frontline staff, participatory management improves decision-making while also increasing employee fulfillment [12]. Scholars like Douglas McGregor and Rensis Likert promoted a more democratic, team-focused leadership approach. Furthermore, Scheiring [27] added that neo-classical management theory likewise emphasizes communication and leadership heavily. Motivating staff members and fostering a positive work atmosphere are said to require effective leadership. Neo-classical theorists support more democratic and participatory approaches to management, in contrast to the authoritarian leadership styles typical of classical management. These leadership philosophies feature motivating, encouraging, and sympathetic leaders who may uplift their teams. Furthermore, open and transparent channels of communication are essential to guaranteeing that information circulates freely inside the company, which promotes openness and trust. Moreover, group dynamics and organisational culture are recognized as significant factors by the neo-classical approach [27]. Macke and Genari [30] further pointed out that the theory recommends managers foster an environment that is congruent with the objectives and values of both the organisation and its employees. This alignment helps in creating a cohesive and motivated workforce [31]. The neoclassical theory represents a significant shift in management thought by prioritizing the human element in organisational analysis. Its emphasis on individual differences, informal groups, and participative management marks a departure from the mechanistic perspective of classical theory. However, the neoclassical theory also has limitations, which will be evaluated in the following section. Critical Analysis The Human Relations Approach, despite pioneering a shift towards a more human-centric perspective in management, is not without its limitations. These constraints underscore the challenges and shortcomings of relying solely on human relations principles to address organisational complexities. It is challenging to create accurate theories and models, as in traditional management, because human behaviour is complicated and frequently unpredictable. Thus, Noble [32] noted that the dependence on the Hawthorne studies as the cornerstone of the Human Relations Approach introduces a significant limitation. Similarly, critics such as [4] have argued that the conclusions drawn from these studies are based more on clinical insight than empirical evidence, thereby casting doubt on their scientific validity. Consequently, Bomanaziba and Dennis [33] concluded that the foundation upon which many human relations principles are built may lack the rigor and reliability necessary for a robust management theory. According to Blados [34], neoclassical theory is merely an expansion and modification of classical methodologies rather than a comprehensive theory of management. It is made up of disparate viewpoints and methods without a consistent underlying philosophy and lacks a cohesive framework. Aksom [8] also mentioned that the Human Relations Approach may unintentionally overlook important elements like organisational structure, procedures, and technology since it places too much emphasis on psychological factors at the expense of structural and technological considerations. As a result, an excessive emphasis on interpersonal relationships may mask more significant systemic problems and impede comprehensive problem-solving. Moreover, McConnell [35] considered the neo-classical theory overly optimistic and unreasonable to assume that interventions in human interactions can fully address every organisational problem. Research shows that problems in organisations often have several causes, such as market forces, technology disruptions, and structural inefficiencies [31]. When addressing these complex problems, relying solely on human relations principles may result in inadequate and surface-level solutions that ignore the underlying systemic problems [36]. Furthermore, as emphasized by Alcaraz et al. [37], the Human Relations Approach frequently overlooks other important elements including market dynamics, regulatory settings, and technical improvements in favor of human variables. This narrow emphasis can make it more difficult for businesses to take a thorough and flexible approach to problem-solving. Additionally, according to Sharma et al. [38], placing a strong emphasis on collective decision-making might induce biases and inefficiencies even while it also encourages creativity and innovation. Organisational agility and effectiveness may be hampered by these processes, which may lead to conflict, hesitation, or pressure to conform. Conclusion The Neo-Classical Theory of Management, which highlights the value of the person, work groups, and participative management. This approach’s strengths are found in its acknowledgment of human issues and encouragement of staff participation in decision-making. The theory does, however, have several significant flaws, such as its propensity to ignore the structural and technical aspects of management and its dependence on presumptions that might not always hold true in real-world situations. From the study perspective, the neoclassical theory cannot be regarded as a comprehensive or whole theory of management, even though it acknowledges the human factor, which is a significant progress in management philosophy. Its practical application is limited by its overemphasis on behavioural elements and disregard of technical and structural aspects. Effective organisational functioning in the modern period requires a balanced strategy that integrates both classical and neoclassical ideas. As a result, managers need to take into account both the technical and human aspects of their companies, utilizing insights from behavioural science to inspire and involve employees while simultaneously upholding effective procedures and organisational structures. Moving further, it is essential to implement a well-rounded and integrated management strategy that takes structural factors and human-centric concepts into account. This involves a few crucial steps: In order to fully comprehend the limitations of the Neo-Classical Theory and to empirically confirm its principles in a variety of organisational contexts, more study needs to be done. In order to provide a more comprehensive approach to management, frameworks that combine structural and technical factors with human relations concepts need also be developed. Furthermore, funding programs for training and development is necessary to improve managers’ abilities to navigate the complexity of contemporary businesses. This entails handling the technical and people sides of management together with effectiveness.

About the authors

Uthman O. Adigun

University of Lagos

Author for correspondence.
Email: adigunuthmanopeyemi3080@gmail.com
ORCID iD: 0009-0005-3189-0581

MSc Student of the Department of Employment Relations and Human Resource Management

RM 203 Eyo Ita Cresent, Akoka Yaba, Lagos, 101212, Nigeria

Isaac O. Okunade

University of Skövde

Email: okunadepropty@yahoo.com
ORCID iD: 0000-0001-7280-4209

MSc student in the School of Business studying, Leadership and Organisational Development

34b st. Agatan, Tibro, Sweden, 43330

References